| If you're in a cash crunch and need to find some | | | | If you have successfully demonstrated to your |
| financing for your company here are three ways | | | | customers that you deliver your merchandise to |
| you may have overlooked. | | | | them on time, as ordered, you may be able to |
| 1. Vendor Financing | | | | persuade one or more of them to put a deposit |
| Stretching out trade payables from, say 30 days | | | | on their future orders, perhaps as much as 50%. |
| to 60 days, is a pretty common method for | | | | You can add an incentive by decreasing your price |
| companies to improve their cash flow. Usually | | | | a bit in exchange for the deposit. Or you can |
| vendors are not very happy when this happens, | | | | throw in a bonus: if they've ordered 100 items |
| and some even voice their disapproval in no | | | | you give them 10 extra. New customers can also |
| uncertain terms. Most businesses are small | | | | be asked for a deposit, especially if it's a large or |
| businesses and stretching out payables only hurts | | | | custom order. |
| everyone in the long run. Think about it: if you are | | | | 3.Trade And Barter |
| depending on one of your customers to pay you | | | | Barter is probably one of the oldest forms of |
| within 30 days, and that customer doesn't pay for | | | | commerce. It is simply the exchange of goods or |
| 90 days, it can significantly affect your cash flow. | | | | services for other goods, instead of using cash as |
| If it's one of your major customers, the impact | | | | the medium. The trade can be directly between |
| can be quite serious. You don't have the cash to | | | | the two parties or the trade can go through a |
| pay your bills and so a ripple effect is caused on | | | | barter exchange. |
| down the line. | | | | The barter exchange usually works on a point |
| This suggestion is different. If you've established a | | | | system, one point for every dollar. The exchange |
| good relationship with your vendors, sometimes | | | | has members who have agreed to barter their |
| it's possible to get them to agree to finance part | | | | services and products. Let's say you need a new |
| of your company by extending their terms for a | | | | lap top, but the computer store doesn't need |
| particularly large order for an extended length of | | | | your product/service. You earn points by |
| time. If you're a new company with little or no | | | | bartering with those individuals and businesses |
| history, you could approach vendors showing | | | | who do need your product/service. You |
| them your business plan and documentation of | | | | accumulate points through the exchange. When |
| orders you've already received. If the vendor is | | | | you have enough for the lap top, you 'buy' the lap |
| convinced that your company will be successful, | | | | top with your accumulated points. The exchange |
| and one of their better customers in the future, | | | | sometimes takes a small percentage of the points |
| they may be willing to give you a break now. | | | | as a fee for their services. |
| Another alternative is to guarantee the vendor | | | | Don't be limited in your thinking as to what can be |
| that they will be your exclusive supplier for an | | | | bartered. Approach bartering as you would any |
| agreed to length of time in exchange for longer | | | | other sale or purchase. Deal with reputable |
| credit terms. Or you can offer to pay slightly | | | | companies. Don't feel you have to discount your |
| higher than market price in exchange for longer | | | | product. The barter purchase is reflected on your |
| credit terms. This method can be dangerous, | | | | income statement as an expense. The barter sale |
| because it sets the precedence of a higher price. | | | | (what you trade) is reflected as revenue. |
| When the longer terms are no longer necessary, | | | | Barter organizations can be found on the web, |
| it may be a challenge to decrease the price you | | | | just put in trade and barter organization. Many |
| pay the vendor. | | | | cities have locally operated barter organizations. |
| Occasionally, it's possible to convince a vendor to | | | | Contact your local chamber of commerce. The |
| exchange a trade payable owed to them for a | | | | yellow pages give listings as well. |
| note payable instead, or possibly an equity position | | | | Use these three methods of coming up with cash |
| in your company. | | | | for your company. |
| 2. Customers That Prepay | | | | |